Solution 6:
Differential Analysis - Sale Beta (102000 units) (alt 1) or Discontinue Beta (Alt2) | |||||
Particulars |
Sale Beta (102000 Units) (Alt 1) |
Discontinue Beta (Alt 2) | Differential effect on income (Alt 2) | ||
Details | Amount | Details | Amount | ||
Revenue | 102000*$145 | $14,790,000.00 | $0.00 | -$14,790,000.00 | |
Costs: | |||||
Direct Material | 102000*$24 | $2,448,000.00 | $0.00 | -$2,448,000.00 | |
Direct Labor | 102000*$27 | $2,754,000.00 | $0.00 | -$2,754,000.00 | |
Variable manufacturing Overhead | 102000*$17 | $1,734,000.00 | $0.00 | -$1,734,000.00 | |
Variable Selling Expenses | 102000*$20 | $2,040,000.00 | $0.00 | -$2,040,000.00 | |
Traceable Fixed manufacturing overhead | 118000*$30 | $3,540,000.00 | $0.00 | -$3,540,000.00 | |
Common fixed expenses | 118000*$22 | $2,596,000.00 | 118000*$22 | $2,596,000.00 | $0.00 |
Income / (Loss) | -$322,000.00 | -$2,596,000.00 | -$2,274,000.00 |
solution 7:
Differential Analysis - Sale Beta (52000 units) (alt 1) or Discontinue Beta (Alt2) | |||||
Particulars |
Sale Beta (52000 Units) (Alt 1) |
Discontinue Beta (Alt 2) | Differential effect on income (Alt 2) | ||
Details | Amount | Details | Amount | ||
Revenue | 52000*$145 | $7,540,000.00 | $0.00 | -$7,540,000.00 | |
Costs: | |||||
Direct Material | 52000*$24 | $1,248,000.00 | $0.00 | -$1,248,000.00 | |
Direct Labor | 52000*$27 | $1,404,000.00 | $0.00 | -$1,404,000.00 | |
Variable manufacturing Overhead | 52000*$17 | $884,000.00 | $0.00 | -$884,000.00 | |
Variable Selling Expenses | 52000*$20 | $1,040,000.00 | $0.00 | -$1,040,000.00 | |
Traceable Fixed manufacturing overhead | 118000*$30 | $3,540,000.00 | $0.00 | -$3,540,000.00 | |
Common fixed expenses | 118000*$22 | $2,596,000.00 | 118000*$22 | $2,596,000.00 | $0.00 |
Income / (Loss) | -$3,172,000.00 | -$2,596,000.00 | $576,000.00 |
Solution 15:
Computation of contribution margin per pound | ||
Particulars | Alpha | Beta |
Selling price per unit | $180.00 | $145.00 |
Variable cost per unit: | ||
Direct material | $36.00 | $24.00 |
Direct labor | $32.00 | $27.00 |
Variable manufacturing overhead | $19.00 | $17.00 |
Variable selling expenses | $24.00 | $20.00 |
Contribution margin per unit | $69.00 | $57.00 |
Raw material required per unit (In pound) | 6 | 4 |
Contribution margin per pound of material | $11.50 | $14.25 |
Rank | 2 | 1 |
As current available material is sufficient to meet total demand of Beta product. Therefore extra material will be utilized in production of Alpha Product.
Therefore maximum price that Cane company is willing to pay for additional pound of material = Regular price + Contribution margin per pound of alpha = $6 + $11.50 = $17.50
Required information The following information applies to the questions displayed below.] Cane Company manufactures two products...
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Required information {The following information applies to the questions displayed below. Cane Company manufactures two products called Alpha and Beta that sell for $125 and $85, respectively. Each product uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 101,000 units of each product. Its average cost per unit for each product at this level of activity are given below: Alpha $ 30 Beta $12 20 Direct materials Direct labor...
Required information {The following information applies to the questions displayed below. Cane Company manufactures two products called Alpha and Beta that sell for $125 and $85, respectively. Each product uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 101,000 units of each product. Its average cost per unit for each product at this level of activity are given below: Alpha $ 30 Beta $12 20 Direct materials Direct labor...
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Required information The following information applies to the questions displayed below.) 15 Cane Company manufactures two products called Alpha and Beta that sell for $125 and $85, respectively. Each product uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 101,000 units of each product. Its average cost per unit for each product at this level of activity are given below: Alpha $ 30 Beta $12 20 8 Direct materials...
Required information The following information applies to the questions displayed below.) of 15 Cane Company manufactures two products called Alpha and Beta that sell for $125 and $85, respectively. Each product uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 101,000 units of each product. Its average cost per unit for each product at this level of activity are given below: Alpha $ 30 Beta $12 Dok Direct materials...